Lululemon Athletica inc. (NASDAQ: LULU)

lululemon athletica inc., an athletic apparel company, together with its subsidiaries, designs, distributes, and retails athletic apparel and accessories for women, men, and female youth. It operates through two segments, Company-Operated Stores and Direct to Consumer.

Take a look at the 1-year chart of Lululemon (NASDAQ: LULU) below with my added notations:

1-year chart of Lululemon (NASDAQ: LULU)

Over the past month, LULU has run up against a $130 resistance (red) on two separate occasions. In addition, the stock has been climbing a trend line of support (green) since the beginning of June. Together, these two lines have formed an ascending triangle on LULU. Eventually, the stock will have to break either the $130 resistance or the triangle support.

The Tale of the Tape: LULU is winding up between two key levels. A long trade could be made at the trendline support or on a break above $130. A break below the trendline would be an opportunity to enter a short trade.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT